Whistleblowers in Canada could receive awards in excess of $1.5 million after a formal policy was unveiled last week by the Ontario Securities Commission to encourage those in the know to help ferret out corporate wrongdoing.
Canada’s largest securities regulator initially capped proposed awards at $1.5 million. But Tom Atkinson, the OSC’s director of enforcement, said last Monday the awards could be larger in some cases, notably if more than $10 million was collected.
He said he could not elaborate until the formal policy was unveiled, but suggested that qualifying for the higher amount would likely be tied to the collection of sanctions or settlement payments, rather than simply the assessment of money due.
The OSC surprised some market participants when the plan for a whistleblower program to encourage reporting of serious securities misconduct was unveiled in February. The original proposal stated that a whistleblower could receive up to 15 per cent of monetary sanctions or settlement payments of more than $1 million, up to the cap of $1.5 million.
During subsequent roundtables, some market participants argued that financial incentives should not be capped, and that they should be paid out to whistleblowers when their tips lead to any financial sanctions, even when those sanctions or settlement payments don’t exceed $1 million.
Some companies and law firms, meanwhile, argued that the whistleblower program would undermine internal reporting and compliance by encouraging workers to seek the regulator’s bounty. They also argued that employees could delay reporting or even encourage more wrongdoing in order to ensure the ultimate sanction was large enough for them to qualify for a financial award.
The financial incentive-backed OSC whistleblower program is to be the first of its kind introduced by a securities regulator in Canada.
In February, the OSC said it was considering taking additional steps to ensure the program’s success, such as requesting legislative amendments to the Securities Act to protect whistleblowers from retaliation in their workplaces.
The OSC policy to be unveiled Wednesday is expected to be open to further public comment, with the regulator aiming to have the program in place by next spring.